pockets 1.2 million before fleeing the country. there's always a bull market somewhere and i promise to find it for you right here at "mad money." i'm jim cramer. see you tomorrow. hey, larry, what do you have for us? all right, jimmy. what is bill clinton going to say tonight? will the world be watching? good evening. i'm larry kudlow. this is "the kudlow report." the top story this evening, just a couple of hours president bill clinton will grit his teeth and address the democratic national convention. a preview of what to say in the nominating speech of president obama in an interview that aired minutes ago on nbc. take a listen. >> we did have a good economy because we did have a lot of expansion. his approach is right and it will pay off if we renew his contract. explain why the economy he faced was much weaker and different than the one i faced so there is

no way any president -- no president -- could have restored it to full health in just four years. >> all right. of course that's bill clinton talking about his favorite subject -- himself and his good economy. i'm okay with it, by the way. he did have a good economy. if he's going to blame bush and republicans for the financial melt down and housing crack up we ought to come clean with pressuring fannie mae and freddie mac, pressuring banks, making ub unaffordable subprime mortgages and mr. clinton signed the bill to end glass stee gel which ended up in hot shot banks taking risks. plus, mr. clinton will say tomorrow night he needs more time to finish the job. more time for what? aside from bashing republicans nobody knows his second term plan. is it more spending, more regular dplating? taxing successful entrepreneurs? this evening, uh upsetting mus. we have dropped four straight

years on the global competitive list. switzerland, singapore, finland, sweden, netherlands and germany all ahead of the usa. we don't want four more years of that and we'll have it to date. first up, bill clinton headlining the evening tonight in charlotte. cnbc's own john harwood previews the former president's dnc address. good evening, john. >> good evening, larry. the democratic convention is getting fired up by speakers behind me. the main event is bill clinton who will bring full circle a relationship that was strained with barack obama when barack obama and hillary clinton ran against each other four years ago. clinton is here because nobody has more credibility in politics on the economy and nobody can frame an argument better, as you see in this ad that began airing last month for president obama. >> the republican plan is to cut more taxes on upper income people and go back to deregulation. that's what got us in trouble.

president obama has a plan to rebuild america from the ground up. >> larry, we have excerpts from what bill clinton will say tonight. he's going to say if you want a winner-take-all, you're on your own society vote republican. if uh you want a society of shared prosperity and we are all in this together, vote for president obama. this convention will hear from elizabeth warren, the consumer advocate. that will be in prime time and attempt to help the democratic ticket and help elizabeth warren in the senate race which could be important on election day in november. >> many thanks, john harwood. we appreciate it. now, despite his much lauded years in often president clinton's two years were characterized by a mixed bag of policy offerings. welfare reform, cutting the tax on capital gains, cutting spending. with the help of republican congress, i might add. the cons, significant. the expansion of fannie mae, freddie mac and hud, allowing

banks to balloon balance sheets. clinton may blame bush but it's tough to figure that president clinton wasn't at least partly responsible for the housing bubble. let's talk to david goodfriend, steve moore, author of "return to prosperity." steve, we'll start with you. i thought bill clinton was reagan's third term. for him to trash republicans and bush doesn't make sense. clinton has nothing in common with barack obama. >> that's exactly right. that was the point of the editorial today. the lead editorial. in a lot of ways obama has been the anti-clinton. let's talk about a couple of areas where obama policies have been in complete contrast to bill clinton. first of all, bill clinton was a fiscal conservative. he did cut spending. there was little growth in the budget under bill clinton. of course barack obama gave us just the opposite.

an $830 billion stimulus plan. the second one that's pretty obvious, larry, is barack obama, very famously said he was going to end welfare as we know it. he signed the welfare reform bill in 1996. it was a great accomplishment. we reduced welfare case loads by half. barack obama has done the opposite. continues to put people on unemployment insurance and food stamps and so on. remember this famous quote from clinton. can you imagine barack obama saying that? >> i want david goodfriend's take. bill clinton is a great speaker and he may make the case but everybody knows bill clinton essentially ran ronald reagan's third term with the help of the republican congress. barack obama wants to transform

it into a nation of government dependence. how can clinton milwaukee the case? >> well, first of all, bill clinton will point out that barack obama inherited a much worse economy than bill clinton did. clinton will say something to the effect that the republicans created a huge mess and now they are saying, hey, barack obama, you didn't clean it up fast enough. you have to put us back in charge. that's the essence of what president clinton will say. to put it in context the t, president clinton, without a single republican vote in 1993 got passed the balance budget economic plan. it was only until 1997 that the republicans then in control of congress had their stuff come into effect. that's indisputable. so what you will see today is president clinton saying, look. when president obama says i'm willing to cut government spending if we also have some revenues offset at a 3 or 4 to 1

ratio that's compromise. clinton will reframe it. >> look what obama is doing. obama is gutting welfare, the work requirements. the republicans came in in 1994. that's when the stock market started to rally. >> that's right. >> you saw it completely changed bill clinton. >> larry. >> i want to ask steve moore. this is important. clinton will blame all of the debt and the crack up on george bush and the republican. >> right. >> but it was clinton's administration that loosened the credit standards for housing for fannie mae and freddie mac. they enforced the community reinvest act to give unaffordable mortgages. bill clinton deregulated banks. he's the guy who signed the end of glass steagal which created tremendous risk taking by hot shot banks. how can clinton blame bush for stuff clinton started regarding the housing boom and the bank problem? >> that's right, larry. if you look at fannie mae and

freddie mac which were at the epicenter of the housing crisis, they were the ones giving 100% loan guarantees on these faulty mortgages and the subprimes. it was started actually under clinton with a big boom of having fannie mae and freddie mac ensuring every mortgage. i want to address another point. president clinton said if n the interview nobody could have cleaned up this mess in four years. everyone agrees, david agrees. everyone agrees obama inherited a great economic crisis. there are two problems with president clinton's line that it couldn't have been cleaned up in four years. you work for a president who did clean up a mess in four years and that was ronald reagan. by 1983 the economy was booming at 8%. the second problem is it was president obama himself who said three and a half years ago i'm going to clean up this mess in four years. p if i haven't, i will be a one-term president. now he's saying, i never had the

ability to clean it up. which is it? >> listen, if somebody like you, larry, asked me, are you better off today than you were four years ago, can i give you my answer? if you're an investor, your stock portfolio is worth twice as much today as it was when barack obama came into office. if you work for a living, you were afraid of being laid off or fired four years ago. today that fear is dissipating. you guys are looking at the wrong metrics. the fact is this country is better off than it was four years ago. the fact is barack obama is a lot more like bill clinton than he is like mitt romney. >> david, why is it not a single democrat at the convention has asked the question? you can cite whatever statistics you want a, but the vast majority of americans don't think they are better off than four years ago. the best statistic to disprove it is the average american is $4,000 poorer than they were four years ago. >> you don't give americans enough respect for their

intelligence. they understand the situation we were in four years ago. they understand this is a much different economy than the one ronald reagan inherited, than the one george w. bush inherited. americans are smart. they understand that the direction we go in is a lot more important than the snapshot of this. >> i don't agree necessarily about the reagan recession, but what's really different is reagan lowered spending and tax rates. obama raised spending and is raising tax rates and also regulations. i think it is the solution, david, not the situation. i want to hear what mr. clinton says. i have respect for him. he did good things on the economy in office. he also did bad things contributing to the ultimate housing bubble. dave, steve, thank you. it's an almighty disaster at th. the associated press reporting tonight that president obama

personally intervened to change the democratic platform language on jerusalem and on god after republicans blasted democrats for taking them out. it came up for a vote three times and democrats booed. listen to this. >> i will do it one more time. all those delegates in favor say aye. all those opposed say no. >> no! >> the opinion of the chair two-thirds voted in the affirmative. the motion is adopted and the platform has been amended as shown on the screen. thank you very much. [ booing ] >> here now prosecute the floor of the convention robert costa of the national review. first on israel they had to have a lot of votes to get jerusalem back into the platform. didn't sound to me like they had

more ayes. >> that's what happened. on tuesday democrats omitted mention of jerusalem as the capital of israel and a mention of god. they did it quietly but there was a roar from activists and from the mitt romney campaign saying where are the democrats with god, with israel. today things got rowdy on the floor. it was a mess. delegates were wagging their fingers saying we don't want to include god or jerusalem. it was a battle on the floor. >> i don't understand. this is going to be headlines tomorrow. is this mitt romney really forcing himself into the democratic convention? is this mitt romney who caused this ruk us? >> mitt romney is a big part of this. so are conservative grassroots activists. democrats thought it wouldn't be a big story to omit those from the platform on tuesday. because of social media, twitter, the message got out that democrats were omitting god and jerusalem. so the president himself stepped in to say this is bad for the

party. we have to fix it. >> robert, thank you for that update. we appreciate it. coming up, the next six days could make or break the markets. dread over mario draghi's presser tomorrow. and a democratic convention jobs report on friday and the fed's two-day meeting next week. a lot for investors to chew on. we have mike ozanian of forbes next. later, where are the ultra rich? 25 million and up? where they are spending money. they are not buying what you think they are. don't forget, folks. free market capitalism is the best path to prosperity. i hope bill clinton doesn't desert it. he was a free market capitalist in office. we'll see. politics is strange. i'm larry kudlow. we'll be right back. my volt is the best vehicle i've ever driven.

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all right. stocks finished today mixed. investors remain cautious ahead of the crucial ecb meeting and friday's highly anticipated jobs report. joining me mow is forbes magazine executive director and co-host of the emmy award winning show sports money. michael ozanian you are pessimistic in your notes. >> you can have all the money

printing you want but the mother's milk are corporate earnings. the third quarter will be the first time since 2009 where year over year earnings won't be up up. that's going to send stock prices lower. >> why do you think we have had a good summer? i know it's been flat recently. we have had a good summer, probably better than the pros expected. what do you think is behind it? >> for a while we had margin expansion. that stopped at the corporate level. there was a lot of euphoria. we have had liquidity in the u.s. we had a lot in europe. after a while, that ceases to prop up stock prices. with each round of qe, we have seen less continuation of the bull market. that's basically run its course at this point. >> how important is it? i'm hearing a lot. the european central bank meeting i guess tomorrow. i guess they will put out a bond buying program. we are not sure whether it's new money or sterilized money or what. how important is it to the world stock market? >> i don't think it will have a

big impact, larry. if it was, we would have started to see stock prices move today. they have come out in europe to say, we are going to keep doing this. there is no limit to it. what will happen is basically the banks will have built up excess reserves like the banks here have. through money printing you can't build into real capitalism. that's what they don't get. >> it seems like europe, the united states and china are all on the cusp of recession. it seems like it. >> they are doing terribly. you see it with manufacturing numbers in particular have been terrible. >> in all three areas. >> you started to see the credit default swaps. that level is higher than it was. they perceive more risk with corporate bonds. >> some positives. auto sales are good. housing, certainly coming off the bottom a little bit. consumer income and spending, not so much. >> you see things where interest rates have a huge impact. they are extremely low. we have seen positive bumps

there. in terms of hiring, we now have almost one in seven americans on food stamps. that's not where you should be in the third year of recovery. >> you are also a sports expert with your great show on the yes network. the football season kicks off tonight. my giants host the dallas cowboys. which team is worth the most? >> cowboys, easy. $2.1 billion, worth more than any toeam in the u.s. jones is a marketing genius. the cowboys get $80 million in stadium sponsorship revenue. over $20 million from the next closest team. >> that's new england patriots. washington redskins. giants are fourth. i would think they would be a fabulous franchise. >> they do better than the jets but not as well as they should. they haven't monetized the new stadium well yet. it's an expensive stadium to run. thaw raised ticket prices this

year. that will bring in more revenue and help. >> will they repeat as super bowl champs? >> i hope so. i'm partisan there. i can't hide it. >> forbes's mike ozanian. we'd like to have him at cnbc but he works for forbes and the yes network. as you heard mike say, a record 46 million americans are now on food stamps. half the households in the country have at least one person getting government benefits. this is not what i call free enterprise. we'll discuss in a moment. stay with us. ♪

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a uh new report from the department of agriculture says 46 million americans now on food stamps. this is an all-time record high. a wall street journal editorial says we are now a food stamp nation. an annual cost of more than $70 billion. are we becoming dependency nation as well? here is delaware democratic senator chris kuhns. thanks for coming on the show. >> thank you. >> good luck on the convention. very exciting. i want to talk about food stamp nation and dependency nation. this shouldn't be happening in the third, third and a half year of economic recovery. why is it happening? >> well, larry, thanks for the chance to be on. there is a lot of excitement in the convention hall. it's difficult to hear you. i think you have been asking

about the record number of americans relying on food stamps to help their families get through the long recover uhry. in my view, this is a critical role for the federal government to play. we ought to, in very difficult economic times provide a floor in terms of housing, food, education and infrastructure. it is my hope that we will come out of the convention with a strong vision for how to rejuvenate the american economy, for how to grow more rapidly in the future so we can end dependency on food stamps and have it be a thing of the past and a thing that was temporary. it's important for us to continue to sustain this part of the social safety net as we continue to recover from a tough recession. >> listen, i glee with the social safety net. okay? i work for reagan. reagan agrees with the social safety net. what's troublesome about food stamps in the programs is the department of agriculture is running advertisements telling people to get their food stamps. the requirements have been lifted. they are telling local offices how to attract people to come in and get food stamps.

to me that sounds like the administration really wants government dependency. when you look at disability insurance, welfare, unemployment insurance, medicaid, they are all up 15% to 20%. this should not be in the third year of recovery. >> larry, i don't agree that what's driving the usage of food stamps is some advertising program by the department of agriculture. uh i think what's driven the number of americans depending on food stamps was the collapse in the economy in 2007-2008 and the unprecedented since the great depression number of americans who lost their jobs, their homes. barack obama and vice president joe biden have done a great job laying out a clear path forward, of investing in the restoration of the economy. we have now had 29 months straight of private sector job growth. none of us wants to see long-term dependency on food stamps. but in the farm bill that passed through the senate with a strong bipartisan majority there was a

serious effort to reduce fraud and waste to frankly reduce the amount of resources available for food stamps in a responsible way. so i think to suggest this administration wants or encouraging dependency misses the mark. i think the reality is we are still recovering from a deep and difficult recession that was caused by bad economic policies of the previous decade. >> i get that. i know that criticism. last one, senator. aren't you worried that, in effect, with this dependency half the households in america have at least one person on government assistance of some kind? we are paying people not to work, senator. that has to be bad for the economy. we want more people to work and produce. out just seems like now under this dependency we are paying people not to work. that troubles me. >> let me go back, if i can, to the farm bill that passed through the senate. again with a strong majority. it actually ended a decades old program that both republican and

democratic administrations and congresses supported of direct payments essentially paying farmers not to farm. it moved instead to an insurance report which allows the federal government to be there as a backstop with unprecedented drought or disaster or flood as there was this summer which ends the direct payment subsidy program that was creating too much dependency in the ag sector. i think there is something here but at the end of the uh day i don't believe they want dependency. i think it wants independence and economic growth. >> thank you chris coons from delaware. i appreciate you coming on. have a great convention. still ahead, america is in decline. a new report shows over the past four years the u.s. has become even less competitive. not even in the top five. the past four years. we'll tell you what and who is tapging our country when we come back. i'm freaking out man.

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i'm larry kudlow. you are looking live at the

democratic national convention in charlotte north carolina where in a couple of hours bill clinton will rail on the republicans and say barack obama needs more time. but we'll ask more time for whatle exactly? first up, last year the united states was fifth in global competitiveness in a survey. this year we have dropped to seventh. let me show you where we are. after switzerland, after swing pore, after finland they recently had so many free market reforms in those countries after the netherlands and after germany. let me posit a wee editorial on why. first of all we have the highest corporate tax rate in the world, an unsolved fiscal cliff. business uncertainty over taxes, spending, deficits and political deadlock. what did we do four years ago and what's going to be done to stop this decline? we have cnbc contributor jared

bernstein, and we welcome allison fraser, heritage foundation director of economic policy. i really can't stand that we are slipping in this rating. i want america first. what's gone wrong here? >> this is no surprise. as you said it's the fourth year we have slipped. we are in seventh place. the heritage index of economic freedom has shown the same thing. one of the major reasons is we have a deaf sut and debt crisis that washington is simply not dealing with. one of the major issues that is confronting washington and really the larger economy today. major part of the fiscal cliff. >> they say it's no longer

reliable. that just gets the hair on the back of my head up. my blood boiling. this has to change. >> i couldn't agree more. let me make different points though. first of all, this may surprise you and allison. every single one of the countries above us on the list with the exception of singapore collects significantly more tax revenues than we do. i don't think that's the problem. i think the problem is this was highlighted in both the articles about this and the piece itself. is declining public trust in government. i know you want to take it to president obama, larry. i think it's about congressional gridlock. think back to the debt crisis. the debt ceiling. the threat to actually default on our currency. very much a function of congressional gridlock led by the tea party. to me that's a perfect microcosm for what's gone wrong. if you dig into the guts you see

u.s. infrastructure going from rank eight when we were in first place to rank 25. >> allison, we have spent so much money on the public goods and yet our rating goes down. what does that tell you? >> i agree we need to have better educational outcomes. listen, we have thrown a tremendous amount of money at k-12 education school. >> we ought to have school of choice. >> we ought to. that's right. >> we ought to have more private development. you know i'm going there. we ought to have a low corporate tax rate.

come on. we are so out of line, so uncompetitive. >> by the way, the federal role in education is far less than what you and allison suggested. that's very much a state and local matter. but when you get to the infrastructure we are under investing in public goods. if we go the route of ryan and romney we'll under invest more. how do you explain the fact that the countries on the lust, finland, sweden, germany. they have tax collections about 36, 40, 42% of gdp. >> that's because their tax rates are lower than ours. all of europe has a lower tax rate. >> that's federal and state. >> i was including federal and state in our 25. this is oecd numbers that includes everything. larry, you say lower the rates, broaden the base. >> that's correct. >> so you are willing to go much

further than any of the republican candidates who continually talk about lowering the rates. >> i thought rom ney was. no specificity. >> i thought he was for that. what's jared complaining -- >> here is the issue. we have the highest corporate tax rate among all developed nations, among our chief competitors and we have a worldwide tax system, not a territorial tax system which most of the competitors have. we punish our multinational firms twice in that regard. just one more. when you think about taxes there are a number of things going on. we can argue about the level that's right for the country. you look at the economy today. it's under performing. we have high unemployment. there are a couple of things going on. we have taxmageddon coming down

the pike. no action from washington. >> let me get one point in, allison. >> just one more. third, we have a massive debt and deficit issue and business doesn't have to get to your point doesn't have confidence that washington will solve it. >> i have a point of agreement with you. >> euro ka. >> you will like this. the statutory tax rate is too high but what corporations pay puts us fourth from the bottom. this is the effective tax rate puts us in a competitive range. the difference has to go. we agree on this. >> right. >> i want to hear folks like you specify what tax increases you're behind. don't say broaden the base. tell me where you will raise taxes. i don't hear enough of it from conservatives like yourself. >> i will talk about the heritage foundation's flat tax where we get rid of our current

tax system and replace it with a flat tax of 25 to 28% rate. it's a much different. >> somebody's paying more. >> some people pay more, some pay less. the rate is lower and the base is broadened. >> we need more specifics on that. >> we'll get you more specifics. >> please co. >> the other issue is businesses look at the large deficits. what they see is future tax hikes on them. that's part of the problem. the pigger the deficit the more worried business is. we'll have another time. thank you both. up next on kudlow, michelle obama delivers a beautiful speech. but she says her husband needs more time. take a listen. >> he reminds me that we are playing a long game here. and that change is hard. and change is slow and it never happens all at once, but eventually we get there. we always do.

>> all right. we're playing the long game. i don't mean to be disrespectful to the first lady, but the president needs more time to do what exactly? we need to know what the long game is. stick around. we'll debate out. -[ taste buds ] donuts, donuts! -who are these guys?

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the last time i went to the gas station must have been about three months ago. i go to the gas station such a small amount that i forget how to put gas in my car. ♪ new figures out tonight show that the majority of the ultra wealthy plan to buy more stocks in the next 12 months. that's good news. what might surprise you is where else they are investing. robert frank joins us now with the details. good evening. >> thanks, larry. also where else they are spending. a new study looks at the rich and it shows they aren't living as large as many politicians, the democrats, would have us

believe. they looked at people worth $25 million or more. it showed more than a third of spending was on travel, a third spend 25,000 or more on home improvement. they didn't buy a lot of bling. most of the ultra rich spent less than $10,000 a year on clothing and jewelry. nearly half spent less than $10,000 on their cars. charity, a much bigger item. half gave $25,000 or more to charity. that's twice the numbers they spent on jewelry, clothing, collectibles combined. i'm not saying the rich are a bunch of thrifty millionaires who drive rusty pickup trucks and give their money to charity but wealth is a target. they are spending less on stuff that will stand out, more on experiences, their homes and families. not a bad thing. >> i love the charity thing. that's important. home improvement is a job creator, isn't it? >> big tomb.

we talk about the yacht job or so private jet jobs. they spend money on travel and home improvement. they are huge employers. nobody thinks of that when they talk about the wealthy and spending. big job creators, especially construction and renovation. >> absolutely. many thanks. robert frank. now in other news the banks get a break from regulators and movement on the mf global mess. cnbc's kayla joins us with more on that. the latest breaking headlines coming into the newsroom. good evening. >> good evening. it's a rare break for the banks but they are getting a break from the cftc on swaps rules. dow jones reports they will postpone required compliance with the new rules until the end of the year. one more indication of the lengthy sausage making as regulators implement dodd frank. a key development in a battle between two trustees overseeing the mf global estate.

one seeking to sue to recover funds. the other pushing for global settlement. a judge ruled in favor of the former. the trusteee saying the decision helps jump start the prosecution. finally a new washington post hugh foundation poll asked one-word reactions to the democratic ticket. for the president good was at the top. it went downhill from trying to failed to incompetent, socialist and loser among others. vice president biden started off good but idiot came in second. both men had other positives. the loser and idiot ones will get the headlines. perhaps barack obama can redeem himself tomorrow. ouch. >> ouch is right. maybe he'll redeem himself. kayla, thank you very much. coming up, first lady michelle obama told the nation many an excellent speech her husband has more work to do. can america afford more of what obama wants to do?

our distinguished guest democrat yk congressman pete of welsh and carly fiorina will debate what he's going to do and what he should do. maybe two different things. please stay with us. this country was built by working people. the economy needs manufacturing. machines, tools, people making stuff. companies have to invest in making things. infrastructure, construction, production. we need it now more than ever. chevron's putting more than $8 billion dollars back in the u.s. economy this year. in pipes, cement, steel, jobs, energy. we need to get the wheels turning. i'm proud of that. making real things... for real. ...that make a real difference. ♪

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i see the concern in his eyes. and i hear the determination in his voice as he tells me you won't believe what these folks are going through, michelle. it's not right. we've got to keep working to fix this. we've got so much more to do. >> that was first lady michelle obama. an excellent speech last night at the democratic national convention. but more to do. sounded like a lot of government this, government that to me. the question is what exactly is president obama thinking about doing many a second term? so far he's not talking. no one seems to know. of course he gives his speech tomorrow evening. here now is congressman peter welch, democrat from vermont and chief deputy whip. we welcome back cnbc contributor carly fioriana, former

hewlett-packard chair and ceo. welcome back. what's obama's second term plan? what do you think? >> we should ask president obama tomorrow night. i think frankly it's more of the same. michelle obama gave a brilliant speech. she proved what an effective surrogate she is on behalf of her husband. it was an incredibly emotional speech. there was no policy. it was about i love my husband. you can trust my husband. i think clinton will lay out the policy tonight although i think it will be difficult. clinton had many substantial differences in his term with the programs that president obama has laid out thus far. i think we need to think about this in the context of what happened. small business failure rate at a 40-year high. structural unemployment at an all-time high and, by the way, the world economic forum today dropped us from number one in january 2009 in terms of global

competitiveness to number seven today. >> peter the president said he needs more time. nobody believes it. i worry we'll see more spending, taxing, regulating and that mr. obama is not going to change his stripes. >> two things. number one, president obama inherited an incredible mess. we went from the clinton years to 20 million jobs created. to losing 700,000 jobs during the bush administration and the wall street melt down that resulted in radical deregulation and an anything goes attitude on wall street. what the president will attempt to continue doing is advocate for a balanced approach. we are all in it together as opposed to top down trickle down policies that are being brushed off by the romney campaign that failed during the bush years.

>> peter, may i argue, we had this in an earlier segment. it was bill clinton who deregulated the banks. it was bill clinton who ended glass steagal and allowed the banks to buy investment banks and insurance companies and take risks. it was a democrat who voted for that. >> he acknowledged he made a mistake on that. in fact, you have many top people including the head of citibank say that was a huge mistake. we need a strong financial sector, larry. you know it. i know it. it has to be one in service of helping the hewlett-packards or the small businesses that are creating jobs. not as a speculative engine. the bottom line, the real question here is are we going with a philosophy that at its core says you're on your own? if you make it on your own that's great. or we are e many a country where we are all in it together. part of personal

responsibility -- and this is a big divide in this campaign -- is the responsibility each of us has to build institutions that are going to make america strong. >> one of the things i find interesting is i think president obama got it exactly right when he gave himself an incomplete. what incomplete means when you're in college is you have failed to complete the required work in the required time. it is an emotional appeal the congressman has given. but we both agree both conventions talked about the american dream, education. there is a different approach. education in president obama's world is increase the budget of the department of education. as we have done it the quality of education dropped. conversely president romney believes you give parents choice, put good teachers in front of classrooms, make sure there is accountability. isn't it interesting the chairman of the convention agrees with every one of the point and called the teachers

union the biggest impediment to education reform. the congressman is right. there are vast differences between the platforms. what's not different is that we all care, we all want the american dream to be more possible for more people. >> we do, but this is where the ryan budget tells us the reality, not the rhetoric. what the ryan budget does is lowers mitt romney's effective tax rate to less than 1%. it increases the pentagon budget. it slashes education funding and funding for many things that made america great -- infrastructure spending, medicine, scientific research. you cannot say that you're going to balance the budget on the backs of middle class americans without having further shrinkage of the middle class. >> what's interesting to me as well is president bill clinton said not six months ago the bush tax cuts should be extended for everyone. that's because he understands. >> he'll be up here tonight.

bill clinton will say what he says. >> he said that because he understands that small businesses, many small businesses file as individuals. clinton is the man who lowers the capital gains tax rate. >> the tax issue -- >> president obama would raise it. >> it's a fundamental issue for the country. >> uh i agree with that. >> do people making over a million dollars need a tax cut? they get one. up to 250,000 people continue with the lower bush rates. over 250 you go back to the clinton rates. >> it's amazing that 250 has become a millionaire. if you're a working family with a man and a woman working and two kids and you're making $250,000 as a couple i don't think you think you are a millionaire or a billionaire. >> the issue here is balance. are we going to bring down the debt with a balanced approach where we ask everybody to contribute? the pentagon has to contribute. taxpayers have to contribute. democrats have to be willing to

make decisions on health care reform. president made it clear. the republicans in congress have stone walled. paul ryan had a shot at voting for bowles simpson, forcing democrats and republicans in congress to make the uncomfortable vote to go to $3 trillion in deficit reduction. >> president obama had an opportunity to lead, step forward and support simpsons bowles. he didn't. by the way, this is about growth. it turns out in three years president obama has never delivered a budget. never delivered a budget. delivered budgets and balanced budgets. >> the republicans haven't passed the budget. >> we have to get out. uh i'll just tell you, my take. bill clinton as president was

ronald reagan's third term. he had nothing to do with president obama. that's why i'm interested in how president clinton will handle this. thank you very much. congressman peter welch of vermont and carly fiorina. that's it for this evening's show. thank you very much for watching. i'm larry kudlow. we'll be back with extended coverage tomorrow evening of president obama's speech.

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